Beware the Finance Sales: You Can't Take a Mortgage Back ; Banks Have Joined the Cut-Price Frenzy on the High Street, but Buying the Wrong Product Might Prove an Expensive Mistake
Sam Dunn; Esther Shaw, The Independent on Sunday (London, England)
You can hit the new year sales, but they can hit you back harder in the pocket.
Lured by the promise of a bargain bonanza, it's easy to splash cash on cut-price goods you don't really want or overindulge and bust a carefully planned budget.
And that's just as much the case with financial products as it is with clothes and electronic gadgets.
Giant "sale" signs currently hang in many bank branch windows (HSBC and NatWest) to grab the attention of shoppers, while garish online ads promise "new year relief " (Lloyds TSB's credit card) and "half-price bank account plus!" (HSBC again, with a packaged current account).
This trend for banks, building societies and other lenders to launch an annual sale of discounted home loans (see Property, page 17), current accounts, credit cards et al was kicked off by HSBC in 2005. Since then, a growing number of rivals have caught on to the potential for pulling in new customers with "cheap" offers, and then cross-selling more expensive products. The question is, though, are the "special deals" really worth buying?
Take the Lloyds TSB credit card, which offers an annual percentage rate (APR) of 15.9 with 0 per cent on balance transfers for nine months, and 1 per cent cash-back for three months.
"It's hard to get enthused," says Stuart Glendinning of price- comparison website Moneysupermarket.com. "It is no 'turkey' but it doesn't tick all the boxes either.
"Arguably, a 1 per cent cashback would have been useful in December and January, but applying for it now means you will have it in February, so the big spending period has been missed." Better cashback cards are on offer from Morgan Stanley and American Express, he adds. …